CALPERS lawyer delivers report on Board bribery and corruption

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A lawyer hired to investigate bribes and kickbacks at one of the nation’s largest pension funds, the California Public Employees’ Retirement System, said on Monday its former board member Alfred Villalobos, corrupted top officials there and likely cost the fund tens of millions of dollars in extra investment fees.

Independent attorney Philip Khinda reported that Villalobos, a so-called “placement agent,” corrupted five senior CALPERS officials including former CEO Fred Buenrostro, former board members Charles Valdes, Kurato Shimada and Robert Carlson, and former investment officer Leon Shahinian.

Both Villalobos and Buenrostro have been sued by the state’s attorney general and federal prosecutors are conducting their own investigation.

Authorities claim that a handful of investment firms paid Villalobos and his cronies over $50 million in secret fees to help make introductions and convince CALPERS executives to do business with them. Buenrostro attempted to shield Villalobos from legal liability by signing papers saying that CALPERS was aware of the fees that Villalobos was collecting.

In his 56-page report, Khinda said that Villalobos created a perception that investment firms needed to pay for connections to secure business for their firms.  The firms likely inflated their fees they charged CALPERS in order to offset the secret fees paid to Villalobos.

Since the scandal was discovered, Khinda has renegotiated deals with the investment firms that were clients of Villalobos and obtained over $300 million in fee discounts.

In a matter unrelated to the investment firms, Khinda’s report provides details about a $4 million consulting paid to Villalobos by Medco Health Solutions, a New Jersey company that handles the CALPERS employees’ drug benefit plan.

In 2005, when the drug administration contract came up for bidding, a copy of an internal CALPERS report was leaked to Medco that showed that the company was the leading contender for the contract. The contract was worth $8 million annually.

After Medco was awarded the contract, the company began paying Villalobos an additional $20,000 per month in consulting fees until 2009, when the scandal was first reported.

CALPERS has since enacted new rules and reform procedures including a prohibition on the payment of “placement” fees by investment firms.

The Sacramento Bee

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

California mayor indicted on bribery and extortion charges

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

The former mayor of Upland, California, a community of 76,000 just east of downtown Los Angeles, was indicted on Wednesday by a Riverside County grand jury on bribery and extortion charges, alleging he demanded money from locals businesses seeking city approvals and permits.

John Pomierski, 56, who resigned from office last week, was accused of demanding $70,000 from a nightclub owner and $20,000 from a medical marijuana cooperative in 2007, in exchange for his help in getting permits and other services for the businesses.


Pomierski was charged in an 11-count indictment, which alleges he “would demand money from the owners of businesses located in the city of Upland in exchange for the performance of official acts in connection with Upland city government business and transactions.”

Also charged in the indictment was a business associate of the former mayor, Edward Hennes, who allegedly acted as an intermediary between Pomierski and businesses looking for favorable municipal treatment. Hennes, 54, is a member of the city’s building appeals board and owner of a local construction firm.

Two other men- Jason Crebs and Anthony Sanchez- acted as middlemen in the extortion operation, communicating demands to businesses and collecting payments. Crebs and Sanchez have reportedly reached plea agreements with prosecutors.

The court documents claim Hennes and others entered into consulting agreements and contracts with businesses to “disguise and conceal” the true nature of the illegal payments. Pomierski’s company, JP Construction Co., received at least $90,000 from Hennes’ company since 2000, the year Pomierski was elected mayor.

Aaron  Sandusky, the owner of the marijuana cooperative, cooperated with the FBI in its investigation of Pomierski and Hennes.

Sandusky said that one of Pomierski’s representatives demanded $20,000 to stop an effort by the city to shut down the cooperative. He said he paid $10,000 to Hennes.

“It’s hard enough to run a business, let along this kind of business,” Sandusky said. “When this happens, where do I go? The police? The FBI? I’m in the medical marijuana business. I’m an easy target.”

If convicted, Pomierski faces a maximum of 145 years behind bars and Hennes faces 50 years.

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Seattle school superintendent fired over financial scandal

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

The Seattle School Board ousted Superintendent Maria Goodloe-Johnson after details of a financial scandal became public, involving a controversial school agency that was found to have issued nearly $2 million in questionable contracts with little or no apparent benefit to the district.

Susan Enfield, the district’s chief academic officer, was appointed as interim superintendent.

The tip of the financial scandal was first discovered in early 2009, although school officials were slow to take action which could have prevented some of the fraudulent transactions.

The scandal centered on a school agency called the Regional Small Business Development Program, that was intended to award smaller-value construction and service contracts to minority and women-owned firms with revenues under $1 million.


An investigation by an outside consulting group in Jan. 2009 disclosed that agency officials did not follow proper procedures, gave favored treatment to some contractors, and that its files were “incomplete and unorganized.” Sources said that some of the construction firms that received contracts weren’t licensed by the state, and didn’t do background checks on employees, including some that worked near children.

The executive in charge of the program, Silas Potter Jr., was reprimanded by his then-supervisor, Fred Stephens in April 2009, and stripped of some of his job authority.

The consultants also criticized Stephens for not properly supervising Potter. Stephens left the district in July to take a job with U.S. Commerce Secretary Gary Locke, a former Washington governor.

Last summer, an audit was ordered by school district officials after they discovered that Potter was soliciting work from nearby communities, using a company he owned, but with a name that made it appear to be part of the school district’s program.  A $35,000 check sent to the district by the Tacoma Public Schools tipped officials of the bogus billing scheme.

After a report was filed with the Seattle Police Department, the money was returned by Potter.

The subsequent audit revealed that the district spent $280,000 for work that wasn’t done or was not for the district’s benefit, and flagged another $1.5 million for questionable services, including consultants and lobbyists who did little or nothing to earn the fees paid them.

Most of the monies were paid to the Urban League of Metropolitan Seattle, local non-profit organizations and firms owned by a former Democratic state chairman and prominent leaders in Seattle’s minority communities.

In December, district officials called in King County prosecutors to take over the investigation. Seattle police and county prosecutors are conducting the investigation under a secretive process by which records and witnessed will be subpoenaed.

Goodloe-Johnson was employed as the district’s superintendent for 3 ½ years, and will be awarded $264,000 in severance pay, equal to one year’s salary. The school board said that would not consider the termination a firing for cause, which would allow them to avoid a severance payment altogether. Lawyers advised the board that such a position would be difficult to defend if challenged in court.

The board also fired Goodloe-Johnson’s hand-picked chief financial officer, Don Kennedy, and agreed to pay him $87,500 in severance monies.

Information from : The Seattle Times

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

Louisville councilwoman establishes summer grant program, hires 12 relatives

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

Councilwoman Judy Green is set to appear in front of the Louisville Metro Ethics Commission on charges she used her government position to enrich her family through a youth summer jobs program.

Green secured $35,000 for the “Green Clean Team” summer jobs program, intended to hire underprivileged youth to clean up alleys, lots and parks. Green ran the program, including making decisions on whom to hire.


Of the total monies, Green used $3,850 to hire 12 of her relatives, and another $28,270 of the funds are unaccounted for.

A police investigation said “the process by which this grant was established, completed and documented lacks professionalism, appears very unethical, and raises questions to the criminal allegations but there is not enough to support any further criminal investigation or prosecution.”

The ethics complaint was filed against Green, a dentist, by former police officer Ray Barker Jr., who ran against her in last May’s Democratic primary election.

Green’s lawyer, Kent Wicker said in a prepared statement “the ethics ordinance requires the process to be confidential. Unfortunately the complainant, who lost the last two elections to Dr. Green, wants to continue that political fight in the media and in this forum. But Dr. Green will follow the law and have no comment on the ethics complaint until the process is over.”

Critics disagree the matter is a private one.

Although the chairman of the ethics committee, Jonathan Ricketts, confirmed the meetings would be held confidentially in executive session, a lawyer representing the Courier-Journal said the city’s ordinance is in violation of state law.

“The open meetings law exempts deliberations … not the hearing of evidence,” Fleischaker said. “So I do not think they are entitled to take evidence at a quasi-judicial proceeding in closed session. They are entitled to deliberate privately, but the hearing itself should be open to the public.”

Information from: Courier-Journal

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 1 comment

Seattle Public School agency under criminal investigation for fraud, exec is missing

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A small-business program administered within the Seattle public school district is under investigation for fraud and its chief executive has gone missing, even though independent consultants warned school officials of potential misconduct over two years ago.

The agency at the center of an investigation by county prosecutors, the Regional Small Business Development Program, was formerly run by Silas Potter Jr., who resigned in June, but has since disappeared. The program was intended to award smaller-value construction and service contracts to minority and women-owned companies that had under $1 million in annual revenues.


The outside consultant, The Suttor Group, warned the Seattle School Board in Jan. 2009 that program officials did not follow proper procedures, gave favored treatment to some contractors, and that its files were “incomplete and unorganized.” Sources said that some of the construction firms that received contracts weren’t licensed by the state, and didn’t do background checks on employees, including some that worked near children.

Potter was reprimanded in April 2009 by his then-supervisor, Fred Stephens, who stripped Potter of his authority to award construction contracts, while allowing him to continue to award other types of contracts.

The consultants also criticized Stephens for not properly supervising Potter. Stephens left the district in July to take a job with U.S. Commerce Secretary Gary Locke, a former Washington governor.

Last summer, an audit was ordered by school district officials after they discovered that Potter was soliciting work from nearby communities, using a company he owned, but with a name that made it appear to be part of the school district’s program.  A $35,000 check sent to the district by the Tacoma Public Schools tipped officials of the bogus billing scheme.

After a report was filed with the Seattle Police Department, the money was returned by Potter.

The subsequent audit revealed that the district spent $280,000 for work that wasn’t done or was not for the district’s benefit, and flagged another $1.5 million for questionable services, including consultants and lobbyists who did little or nothing to earn the fees paid them.

Most of the monies were paid to the Urban League of Metropolitan Seattle, local non-profit organizations and firms owned by a former Democratic state chairman and prominent leaders in Seattle’s minority communities.

In December, district officials called in King County prosecutors to take over the investigation. Seattle police and county prosecutors are conducting the investigation under a secretive process by which records and witnessed will be subpoenaed.

The Seattle School Board is also looking into allegations that Superintendent Marie Goodloe-Johnson and other top officials may have been aware, or should have been aware of the fraudulent transactions.

Some evidence suggests that district employees expressed concern of irregularities within the program, but school officials didn’t follow through on them. Other employees who had concerns remained silent, citing their fear of reprisal, according to the audit.

In the meantime, school officials have shut down the small business program until it can be more professionally managed with proper oversight.

Information from: The Seattle Times

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Atlanta school officials reprimanded for continued obstruction in cheating probe

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

Georgia state officials, investigating a culture of “intimidating, threatening and retaliating” against Atlanta Public School employees who come forward with information about widespread cheating and corruption in the system, sent a letter to the school board on Wednesday, demanding that the obstructive practices cease immediately.

Investigators appointed last summer by then-Gov. Sonny Perdue, say they have found evidence that the district-wide cheating on the state’s standardized test, the CRTC, has been going on for years. Since the early 2000’s, they say that the district engaged in “a pattern and practice” of punishing employees who reported cheating, or asked questions how the CRTC was managed.

The three state investigators who signed the letter, Mike Bowers, Bob Wilson and Richard Hyde, said the district repeatedly acted to intimidate witnesses during their own investigation, by having principals accused of changing test scores stand outside the room were witnesses were giving statements “with the obvious intent to make their presence known and to put a chilling effect on the staff member being interviewed.”

The letter also detailed accusations that a high level official in the district encouraged principals to refuse to cooperate with state investigators, and instead, write “go to hell” memos to state agents.

Even after the district learned of the official’s illegal actions, it waited two months before taking action, consisting of re-assigning the employee. During that period, the official took retaliatory action against at least one whistleblowing district employee.

The state investigators also demanded that the district immediately stop their own investigation, believing it was intended to further suppress information. District Superintendent Beverly Hall responded by denying the district was investigating anything, saying only that it was “conducting an analysis.”

Before the scandal was exposed by The Atlanta Journal-Constitution, the Atlanta school system was heralded as a model of success by turning around a poorly performing school system in just a few years’ time.

In 2008, the AJC reported that an independent study by researchers at the University of Pennsylvania determined that the vastly improved test scores were statistically impossible.

Ultimately, outside investigators found widespread evidence of cheating in at least 58 schools. Test sheets showed that incorrect answers were erased on tests, and correct answers were substituted. Investigators also said that many teachers admitted to changing test results, and supplying questions and answers to students before handing out tests.

Largely based on the phony scoring achievements, the district’s Superintendent Hall, was named 2009 National Superintendent of the Year by the American Association of School Administrators. In May 2010, she was appointed by President Obama to the National Board of Education Sciences.

The AJC reported last month that the district has punished teachers that have reported the cover up of  cheating and other illegal activities, and has rewarded those who keep quiet.

The Atlanta Journal-Constitution

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Georgia mayor suspended over missing $575,000 in city funds

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A special commission appointed by Georgia Gov. Nathan Deal has suspended longtime Broxton Mayor Bobby Reynolds.

Reynolds was indicted in December, along with his daughter, the former city clerk, over the disappearance of $575,000 in city funds. In December, a Coffee County grand jury charged Reynolds, 69, with two felony counts of violating his oath of office, two misdemeanor counts of malfeasance of office and a single count of failing to take and file the proper oath of office.

His daughter, Tracy Lott, 48, was charged with two counts of theft by taking and one count of making false statements. Last year, the City Commission fired her after an audit dating back to 2000 determined the money was missing.

Both Reynolds and Lott pleaded not guilty.

Officials said that Reynolds failed to have audits conducted on city finances since 1999, a condition of receiving monies from the state.

Reynolds was accused of failing to oversee the city finances and failing to supervise his daughter. During the period Jan. 1, 2008 though mid-July 2009, she overpaid herself at least $15,000 in salary. She also lied to Georgia Bureau of Investigation agents about the overpayments.

If convicted, Reynolds faces up to 13 years behind bars, and Lott faces 35 years.

The Florida Times-Union

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon